Exit and Growth Strategies for Middle Market Businesses

The report below gives a good overview of the first quarter M&A activity in the Consumer Retail Industry Sector. M&A activity for North American based target companies in the Consumer Retail sector for Q4 2017 included 94 closed deals, according to data published by industry data tracker FactSet.

One of the notable transactions of the quarter was announced in December when Colgate-Palmolive Co acquired Physicians Care Alliance LLC, trading as PCA Skin, a portfolio company of Norwest Venture Partners for US$730 million in cash. The acquisition would allow Colgate-Palmolive Co to expand its personal care business. The transaction was subject to customary closing conditions, including US antitrust clearance and is expected to accretive the earnings of Colgate-Palmolive Co in 2018.

The old-world retail sector continues to lag as brick-and-mortar stores struggle to compete against Amazon and other e-commerce businesses. This is true for midmarket retailers as well as several major retailers – including RadioShack, PayLess ShoeSource, Vitamin World and Toys R Us, which filed for bankruptcy protection in 2017.

Industry Indicators

Total US consumer spending, an indicator of retail sales, rose 1.7%, primarily from services expenditures, in December 2017 compared to the same month in 2016.

Total US retail sales, a measure of the retail sector, increased 5.1% in the first month of 2018 compared to the same period in 2017.

US tourism spending on shopping, which impacts retail sector revenues, increased 3.6% in the third quarter of 2017 compared to the same period in 2016.

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